Roofs define luxury home insurance

The insurance industry is experiencing a significant increase in roof related claims. The combination of increasingly severe weather events, inflation-driven repair costs and the growing problem of roofing scams has created a perfect storm – one that is straining insurer portfolios and affecting policyholders, particularly those with high value properties.

In 2022 alone, convective storms (which include hail and wind damage) resulted in $29 billion in roofing claims. For example, severe convective storms like the August Midwest Derecho caused significant insured losses in the U.S., contributing about $10.9 billion in claims, data from the Insurance Information Institute shows.

These storms have become more frequent and more intense, leading to substantial impacts on insurance portfolios, particularly for roof damage. By 2023, III data shows that total damage from convective storms has nearly doubled to $57 billion, highlighting the growing challenges facing both insurers and homeowners.

Related: Severe U.S. storms continue to drive global natural disaster losses: Gallagher Re

Those who work to insure high net worth individuals know that protecting their homes requires more than standard coverage.

The Perfect Storm of Rooftop Claims: What’s Driving It?

Several key factors are driving the rise in roofing claims. A changing climate is leading to more frequent and more severe storms, resulting in widespread and costly damage.

Between 2022 and 2023, claims for roof damage due to hail storms saw a significant increase.

A notable increase was reported by State Farm, where hail claim costs increased by more than $1 billion, reflecting a substantial increase in the number of claims and the inflationary impact on materials and repairs. The number of damages increased by almost 45,000 during this period, caused by more frequent hail events. Other reports suggest that hail activity, particularly in early 2023, is up nearly 74 percent from the previous year, based on data from NOAA.

Asphalt shingle roofs—the most common and affordable roofing material in the U.S.—are particularly vulnerable, especially as they age. Even newer luxury homes are not immune, as large roof areas mean higher repair costs when damage occurs.

In one case, a high-net-worth homeowner in Texas faced a claim for nearly $150,000 after a hail storm dented a newly installed asphalt shingle roof.

Nature is having its fun, but that’s not the only reason rates are rising. Roofing scams are on the rise, with unscrupulous contractors pushing useless or fraudulent claims — sometimes years after a storm. These scams drive up costs for everyone, hurting insurers and policyholders. For luxury homes, these fraudulent claims can lead to non-renewals or coverage limitations, leaving them vulnerable.

How Insurers Adapt: ​​A Changing Coverage Landscape

Increasing pressure on insurers has led to adjustments in the way roof claims are handled. Insurers are now more selective about the properties they insure, placing particular emphasis on the condition and age of the roof. Policies that once provided full coverage for roof replacement without age limits are now subject to depreciation clauses. Roofs older than 15 or more than 20 years may no longer qualify for full replacement, with some policies only covering a percentage of repair costs depending on the age of the roof.

Related: The problem(s) with hail claims – Part 3

In addition, insurers use advanced technology to assess roof condition remotely. Satellites and drones capture images of properties, so roofs need to look good, as their appearance could directly affect how your home is appraised.

In one case, a high-net-worth client was denied coverage renewal after a drone assessment revealed extensive wear and tear on a 22-year-old roof. The insurer insisted on immediate replacement or refused to renew the policy.

For those working to insure high net worth individuals, taking a proactive approach to roof maintenance is no longer optional—it’s a necessity to maintain insurance. Having them invest in Class 4 hail resistant roofs can reduce the risk of storm damage, reduce premiums and ensure better claims management in the future.

A well-maintained roof signals to insurers that they are serious about protecting their home and, by extension, their risk portfolio.

Related: Aerial imagery use report indicates hail risks to Colorado homes

The rise in roof claims has led to significant changes in the insurance industry. By staying ahead of these trends, agents and brokers can better educate and protect their clients’ investments and ensure they maintain access to the coverage they need. As fraudulent claims and roofing scams become more prevalent, advising clients that engaging in these practices puts their coverage at risk and increases costs for everyone. Proactive education and vigilance are vital to protecting homes and the health of the insurance market.

Poux is executive vice president of risk management at The Liberty Company Insurance Brokers. He has over 30 years of experience working with high net worth families. Poux has held senior roles at Chubb, Fireman’s Fund and AIG. He is also a volunteer firefighter. Email: [email protected]; Profile activated LinkedIn.

Delaney is CEO and Executive Director of the Private Risk Management Association. She spent more than 18 years in the industry as head of sales training at AIG before joining PRMA. Her experience includes building a high net worth sales school designed to educate brokers on how to better advise clients. Linkedin profile.